The purposes of this Bill are:—
(1) to authorise the increase to £135 million of the existing statutory limit of £120 million on capital expenditure which the Electricity Supply Board may incur for general purposes, that is to say, exclusive of capital expenditure on the electrification of rural areas.
(2) to authorise the increase to £37 million of the present statutory limit of £32 million on the expenditure which the Board may incur on the electrification of rural areas.
(3) to provide statutory authority for the payment of increased subsidy for rural electrification.
The Electricity (Supply) (Amendment) Act, 1961, authorised the E.S.B. to incur capital expenditure for general purposes up to a total of £120 million, that is, an increase of £20 million on the then existing statutory limit of £100 million. The Board's generating plant programme announced early in 1960 was based on an estimated rate of growth in the demand for electricity of 7 per cent. per annum and provided for the raising of the Board's generating capacity to 1,148 megawatts by 1968-69. The Board subsequently found it necessary to accelerate this programme because of the continued increase in the rate of growth in demand for electricity. The rate of increase over the previous year during each of the last three years was as follows:—
1959/60, 10.4 per cent.; 1960/61, 7.9 per cent.; 1961/62, 8.4 per cent. The present total installed generating capacity of the Board is 723.5 megawatts; this includes 90 megawatts of old plant at the Pigeon House now available only for stand-by purposes and the four small turf fired stations on the western seaboard representing 20 megawatts. Under the revised programme, total capacity would be increased to 1,109.5 megawatts by 1966-67. The decision to accelerate the generating plant programme was indicated by the need to avoid power cuts, particularly for industrial uses.
The Board recently reported to me that on the assumption of an estimated annual growth of at least 8 per cent. in the demand for electricity over the next five years, and taking account of plant retirals in the meantime, it will be necessary to provide further new generating capacity in 1967-68 in addition to the capacity in the programme already approved. The Board propose to provide a coal or oil station of two 60-megawatt sets in the Waterford region, the first to be commissioned in the autumn of 1967 and the second in the summer of 1968. The target for 1968 is therefore now raised to 1,229.5 megawatts excluding retirals. As it takes over five years from the time of the decision to build before a generating station can be commissioned, it will be necessary for the Board to enter into commitments for the Waterford station in the very near future.
The Board's expenditure and commitments for general capital purposes to 31st March, 1962, amounted to £119 million. The Board's capital expenditure for general purposes at that date amounted to about £84 million and work in progress or work approved represented about £35 million. The addition of the projected new station at Waterford, estimated to cost £7.8 million, to the Board's existing programme would therefore raise the total of their approvals above the statutory limit of £120 million on capital expenditure for general purposes. In addition, over the next two years it will be necessary for the Board to authorise capital expenditure on transmission and distribution systems and on buildings to the extent of about £7 million. The Bill, therefore, provides for the raising to £135 million of the existing statutory limit of £120 million on the Board's capital expenditure for general purposes which on the basis of present estimates should be sufficient to cover expenditure likely to be authorised during the next two years or so.
The installed capacity for hydroelectric plant at 31st March, 1962, was 219 megawatts. All the important rivers have now been harnessed for electricity generation. While the development of other rivers would in present circumstances be uneconomic, the Board are continuing to collect data and investigate other rivers with a view to possible development later for hydro-generation.
The Board's generating programme provides for the absorption by 1968 of the annual output of all the bogs which are at present considered economically usuable for the generation of electricity. This will mean an increase of 202.5 megawatts on the Board's existing peat fired generating capacity of 205 megawatts. The programme provides that coal-oil-fired stations will be sandwiched between peat-fired stations so as to ensure maintenance of electricity supply in a year in which weather conditions would be very adverse for either peat or hydro-generation of electricity or both. To ensure continuity of bog development and employment by Bord na Móna, the coal-oil stations will be used only to the extent that hydro and peat generation will be insufficient to meet demand.
The investigation into the possibility of utilising deposits of low-grade semi-bituminous coal at Arigna in an additional electricity generating unit is still in progress. It has been established that there are sufficient reserves of lower ash content coal but before any decision could be taken in this matter it must be first established that the coal can be extracted economically on a regular basis over the life of a new station. The necessary investigations are still proceeding.
The Board experienced a record peak load in January this year when to meet a load of 606 megawatts the Board had in operation 40 out of the 44 generating sets in their system. Two of the remaining four sets were out for overhaul and two small sets, one each at the North Wall and Poulaphouca, were standing by leaving the Board with just enough capacity in reserve to cover breakdown of the largest single generating unit in their system, which is 30 megawatts. The system peak load of 606 megawatts experienced in January last, compared with peaks of 540 megawatts in December, 1960, and 476 megawatts in January, 1960. The addition of the 40 megawatt Bellacorick station to the system later this year should help the Board to meet the peak loads next winter.
From the end of the present decade onwards, the contribution made to electricity supply by native resources is bound to grow proportionately less. The Electricity Supply Board are keeping in touch with the work being done in various parts of the world in the application of nuclear energy to the production of electricity. It is clear so far that conventional fuels are cheaper than nuclear power for electricity generation. A nuclear station would not be commissioned in this country until the base load has increased to a point where a nuclear station of the minimum economic size could be given continuous night running of reasonable magnitude together with full load day operations. It is not expected that this stage will be reached in this country for at least ten years and even then the choice of a nuclear station as against the conventional thermal station will still depend on the relative economics of the two types of stations.
As Senators are aware, the Government recently decided that increased State assistance should be provided for the extension of rural electrification. Under the existing rural electrification scheme which was started in 1946 and is due to be completed this year, 775 out of a total of 792 rural areas will have qualified for development. The remaining 17 areas failed to qualify under that scheme because the total fixed charge revenue from them would not have been sufficient to meet the minimum return on the capital cost of development required under the scheme. These areas are mostly remote areas with low density of population and correspondingly higher costs of connection and low average return per house. A special subsidy of £90,000 is now being provided under the Bill to meet the cost of the necessary "backbone" lines in these areas so as to enable them to be developed, and it is expected that as a result connection can be offered to about half of the estimated 6,000 dwellings in these areas at normal rates of fixed charge. Other dwellings can, of course, obtain supply but they will be asked to pay some extra charge.
The initial development of all the rural areas, including the 17 areas at present undeveloped, is designed to connect some 283,000 out of a total of 395,000 rural dwellings. Of the total rural dwellings, some 269,000 or 68 per cent. will have been connected at standard rates of fixed charge compared with the target of 69 per cent. which was set when the rural electrification scheme was initiated in 1946. Some 112,000 rural dwellings throughout the country will still remain unconnected when the development of all the rural areas is completed. The initial development scheme, on completion, is estimated to cost about £32 million, of which the E.S.B. will have contributed £25½ million approximately and the State £6½ million.
The ESB are incurring very heavy annual losses on rural electrification despite the State subsidy towards the capital cost of rural electrification. In recent years these losses have grown to around £700,000 and are expected to continue at a very heavy rate for some years thereafter, and, thence, to reduce gradually. In order to avoid further increases in losses in rural electrification the ESB have been connecting houses for electricity on post-development only on the basis of a minimum return by way of fixed charge of 7.3 per cent. of the capital cost of connection, this being the economic return on the investment after taking account of the State subsidy of 50 per cent. of the cost of connection. The return required by the Board for initial development has been 4.7 per cent. but even after taking account of the State subsidy this has been very uneconomic as can be seen from the losses of the Board on Rural Account.
With a view to stimulating a more rapid rate of connection in the areas already developed the present Bill provides that over the next five years the existing subsidy of 50 per cent. in respect of connections in areas to which a supply has already been extended will be increased to 75 per cent. subject to a maximum of £75 per house. The increased subsidy is designed to permit of about 77,000 of the 112,000 unconnected premises in rural areas being in a position to obtain the electricity at nominal rates of fixed charge. About 23,000 premises would have to pay a special service charge but except in very few cases, the special charge will not add more than 50 per cent. to the normal fixed charge. There will still remain some 12,000 households, mostly in remote areas, which could be offered electricity only at rather higher rates of fixed charge because of the very high cost of connecting such premises. The average cost of connecting these premises would be about three times the average cost of connecting other premises and, in the circumstances, these householders are being offered, as an alternative, a subsidy of £10 per house to enable them to instal bottled gas. The bottled gas subsidy will cover the cost of two full cylinders, two blanked-off points, a regulator and the necessary pipes. A further announcement will be made in regard to this scheme shortly.
Following on the provision of increased subsidy the ESB will adjust the charges of rural consumers who are already paying special service charges.
Of the 15,000 rural consumers at present paying special service charges, some 3,000 will have these charges eliminated altogether and the charges in the case of the remaining 12,000 households will be reduced by about half.
The ESB have reported that due to unforeseen circumstances such as severe storm damage there has been delay in completing the development of the economic areas but it is expected that all these areas will have been developed within a few months. The ESB will then start on the development of the 17 uneconomic areas and expect that work on most of these areas will have been completed before the middle of 1963, and that the development of the few remaining areas will be completed before the end of 1963.
Most other European countries had made considerable progress with rural electrification before our rural electrification scheme was started in 1946. The provision of rural electrification in these countries did not, however, present the same problems as in this country because most of their rural inhabitants live in villages and hamlets thus making connections easier and cheaper whilst in this country most rural dwellers live in scattered farmsteads thus adding to difficulty and cost of connection. When these factors and also the differences in social and economic conditions are taken into account this country's rural electrification scheme is a note-worthy achievement.
Senators are well aware of the significant contribution which the ESB, the first of our semi-autonomous State sponsored bodies, has made to economic development and social well-being generally in our country in the 30 odd years of its existence.
The proposals the subject of this Bill will enable the Board to continue the good work and I recommend it for the approval of the House.